I IEEJ：November 2019○ｃIEEJ 2019
Special Bulletin
A Japanese Perspective on the International Energy Landscape (455)November 20, 2019

At the Technical Meeting in OPEC
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn November 18, the fifth Technical Meeting on Asian Energy & Oil Outlook was held at
OPEC headquarter in Vienna. As indicated by the title, OPEC secretariat officials and representatives
from research organizations and business corporations in Japan, China, India and South Korea, frominternational organizations such as the Asia Pacific Energy Research Center and from consultingfirms in Europe and Asia participated in the meeting to discuss the Asian energy and oil market
outlook and challenges in three sessions under the Chatham House rule. OPEC Secretary General
Mohammad Barkindo and other OPEC secretariat executives attended the meeting throughout theday, impressing me with their very high interest in these topics and their enthusiastic attitude toward
the meeting.
The annual Technical Meeting was launched in 2015, originating from the first meeting
between the OPEC secretariat and the Institute of Energy Economics, Japan, in May 1987. I
continuously participated in the IEEJ-OPEC gatherings that took place almost every year.
Participants in the IEEJ-OPEC meeting later began to include representatives from researchorganizations and business corporations in South Korea, China and India, leading the gathering toexpand and develop into the Technical Meeting. The OPEC secretariat has positioned it as one of its
key official events, as indicated by its executives’ abovementioned enthusiastic participation. Thisapparently means that the meeting and Asian issues as its topics have grown important for OPEC. In
the following, I would like to summarize impressively important points of discussion at theTechnical Meeting.
First, I felt anew that various challenges exist in regard to the future stabilization of theinternational oil market. In the meeting, the analysis and discussion seemed to indicate that OPEC
would have to continue efforts to adjust supply and stabilize the international oil market over a shortterm as global oil demand growth deceleration amid lingering global economy risks is combinedwith production expansion in non-OPEC oil producing countries including the United States. On theother hand, oil market stakeholders commonly recognize uncertainties having great influence on thefuture course of the market as non-OPEC oil production is expected to slow down and then stop its
expansion at some time due to slowing growth in U.S. shale oil production and others. Global oil
demand is expected to keep on expanding due mainly to growth in Asia over a medium term.
However, global demand could stop growth and peak because of climate change policies, electricvehicle diffusion and technological advancement. Therefore, there are great uncertainties about thefuture course of the oil market. OPEC will be required to make necessary measures to stabilize themarket in response to specific future developments.
Second, participants in the meeting were strongly conscious that Asian emerging countries
are destined to play a leading role in expanding oil demand in any future scenario while there are1

I IEEJ：November 2019○ｃIEEJ 2019
great uncertainties about global demand for energy including oil. At present and in the immediate
future, the future course of Chinese oil demand growth is a focus of attention. In this sense,
participants in the meeting indicated their strong interest in the fate and effects of the current
U.S.-China trade war. It was also pointed out that China’s energy or oil demand could peak in thelong run due to such factors as economic growth deceleration, falling population, energy andenvironment policies and technological advancement. How and when Chinese oil demand will peakis a key point for anticipating the future course of the international energy market. It was impressivethat discussion in the meeting focused on strong interest in India and the Association of Southeast
Asian Nations that would replace China as the driver of energy and oil demand growth over a longterm.
Third, arguments given in the meeting were based on strong interest in the climate change
issue as a factor that would exert great influence on future energy demand growth and energy
choices in Asia. It was interesting that these arguments questioned how climate change
countermeasures would be balanced with measures to address other important energy challenges
including energy poverty and energy access issues that are significant for developing and emerging
market economies.
As abnormal weather events are increasing and intensifying on a global scale to cause
natural disasters and make them more devastating in a manner to attract global interest, calls
naturally grow for enhancing climate change initiatives. In such situation, how to address climatechange, economic growth and development, energy poverty and energy access in a balanced manner
is a very complicated, difficult issue for developing and emerging market economies that are
expected to attain economic growth and improve living standards in the future. While it is needless
to note that climate change countermeasures are important, energy indispensable for economic
activities and daily life must be affordable particularly for low-income developing economies. Thosedifficult issues that occasionally trade off with each other are attracting global interest and growing
as serious challenges for developing and emerging market economies.
In this regard, it was interesting that participants in the meeting indicated high interest in a
total-cost minimization approach to climate change that the IEEJ has advocated in the past severalyears. The IEEJ has proposed the approach considering that developing and emerging market
economies set to attain growth in the future, as well as advanced economies, are required topragmatically address climate change as a very long-term issue that is extremely important, while
innovative technologies and innovation are expected to play a key role in resolving the issue. The
approach might have been appreciated as pragmatic, attracting strong interest from participants inthe meeting.
Fourth, the International Maritime Organization’s plan to toughen regulations on the sulfur
content of marine fuel from 2020 became a focus of discussion at the meeting. The tougher
regulations to limit the content to less than 0.5% could gravely affect crude oil choices, refinery
operation, investment in related plants and equipment, crude oil and petroleum products trade andrelevant business corporations’ strategies and earnings. In the discussion, stakeholders madeinteresting presentations and arguments on their responses to the upcoming IMO regulations andtheir impact on the future market supply-demand balance and product prices. An impressive factgiven in the discussion was that the installation of scrubbers on ships to desulfurize high-sulfur fueloil has made some progress, indicating that market price gaps between products in the market and2

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prospects have exerted influence on players’ behaviors and investment. An interesting argument in
the meeting indicated that responses to the IMO’s plan to enhance regulations on carbon dioxide
emissions from marine fuel would be a more important problem over a long term.
As indicated above, there are various challenges and uncertainties about the future courseof energy in the world and Asia. To develop a significant long-term outlook, we must understandrealities and prepare appropriate future scenarios responding to uncertainties.

Contact: report@tky.ieej.or.jp
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